Goode v Bechtel [1904] HCA 27; (1904) 2 CLR 121 (12 October 1904)

HIGH COURT OF AUSTRALIA

Goode Plaintiff, Appellant; and Bechtel Defendant, Respondent.

H C of A

On appeal from the Supreme Court of Western Australia.

12 October 1904

Griffith C.J. Barton and O'Connor JJ.

Robinson (with him Russell), for the appellant.

Pilkington, for the respondent.

Griffith C.J.

This is an appeal from the Supreme Court of Western Australia setting aside an award made by an arbitrator upon a submission to him of all matters in dispute between two persons who had previously carried on business in partnership in Perth and Kalgoorlie. By the reference all disputes, questions, and matters in difference between the partners in anywise relating to or concerning the partnership were referred to the arbitration of Mr. Moxon, who made an award by which he directed various things to be done by the parties. Amongst other things the award contains this paragraph:—"Paragraph 3. That as regards the alleged and unexplained deficiency of £2,974 13s. 4d. shown in the balance-sheet of the said partnership affairs prepared by Messrs. Smith and Goyder, and produced to me on the said reference, the deficiency alleged shall be taken to be the sum of £2,974 13s. 4d. and no more, and that there shall be allowed by way of deduction from such sum the following items: Loss on tannery, £1338 18s. 5d; D. & P. Discounts, £14 3s. 8d.; advertising charges, £143 8s. 8d; making a total allowance of £1,496 10s. 9d., and leaving a balance deficiency of £1,478 2s. 7d., of which such last-mentioned sum the said Robert Bechtel shall forthwith pay to the said Frederic Daniel Goode one half namely, the sum of £739 1s. 3d." An application was made to the Supreme Court to set aside the award on the ground that the award, in paragraph 3, was bad in law on the face of it. I confess to having felt some difficulty in apprehending what the alleged mistake in law is. Reading that paragraph by itself, the first impression it would convey to my mind would be this:—On taking the accounts of the affairs of the partnership there was a deficiency in the assets as against the liabilities of £2,974 13s. 4d., the cause of which was said to be unexplained; but on inquiry I find that £1,496 10s. 9d. of this has been accounted for. Then an award follows that the parties should bear the remainder of the deficiency in equal proportions. To that there is on the face of it no objection. It is apparently a most reasonable order to make. But we are told that it is a mistake, and that the real meaning of it is that the respondent shall bear the whole of that loss. We are also told that the respondent was the active partner in the partnership, the appellant being merely a sleeping partner. These facts appear to have been treated by the Supreme Court as before them, and as it is on those facts only that the respondent makes out any sort of a case here, we will deal with them on the assumption that they are true. The error of law, suggested to be apparent on the face of the award, is that, when there is a partnership loss, it must be borne equally, and that no partner can be made responsible for the whole of any particular loss unless it is through his default that it was occasioned. Grant that that is so. The next step which is necessary before you can find any mistake in law is, that it must appear that the arbitrator has required the respondent to bear the whole of this loss without its being proved that he was responsible for it. It was the arbitrator's province to ascertain whose fault it was. The fact that he describes it as an unexplained deficiency does not indicate that he failed to apply his mind to the question who should be held responsible for it; but supposing that it does, and that on the evidence before him it did not appear who was responsible, he may have come to this conclusion:—"Here is a deficiency. Neither partner offers any explanation, and, in the absence of any explanation, I think it is a reasonable thing for me to make the partners bear the loss equally, or, as is suggested, that the active partner should bear it all." I fail to see anything contrary to law in that. The most that can be said or suggested is that the arbitrator, in dealing with the matter, applied an erroneous rule as to the onus of proof. The law is clearly settled, as stated by Williams J. in Hodgkinson v. Fernie[1], that when a cause or matters in difference are referred to an arbitrator, whether a lawyer or a layman, he is constituted the sole and final judge of all questions both of law or of fact. During the argument we asked for illustrations, concrete instances, of cases of what was called an error of law apparent on the face of an award; but the instances referred to by Mr. Pilkington were cases in which it was clear that the arbitrator had not really himself decided the question which was referred to him, but had answered the question by reference to what he supposed to be a rule of law, but was not a rule of law. There may be other instances, but each case must depend upon the nature of the submission, and the form of the award. We have only to deal with the award before us, and, as I have said, the most that can be urged against it is that the arbitrator took an erroneous view of the onus of proof. Whether he did or did not is merely conjecture. It does not appear on the face of the award. The award on the face of it is good, and ought to stand, and the appeal should be allowed.

Appeal allowed with costs, including costs of proceedings in the Supreme Court.

Solicitors for appellant, Haynes, Robinson & Cox.

Solicitors for respondent, Stone & Burt.

[1] [1857] EngR 940; 3 C.B., N.S., 189, at p. 202.